The Reason Why Traders Never Succeed! How To Become The Trader You Need To Be
The most dangerous trading mistake any trader can make is “system hopping” and we believe that it is the single biggest cause for failure in trading.
System hopping means that a trader keeps changing his trading method, his indicators, entry signals and strategy all the time. While looking around for new strategies is normal in the beginning, when a trader still hops around systems after months, his chances of reaching profitability in trading are slim to none.
Why do traders change systems?
Traders are always hoping to find the Holy Grail that will make them a lot of money without putting in a lot of work. But when does it ever work that way in life?
When traders do not understand the role of losses and falsely believe that a good trading strategy should only produce winners, traders are more likely to change systems.
Furthermore, a profitable trading strategy is not something that you just stumble over, but it has to be built step by step. And, most importantly, the weakest link in your trading strategy is always YOU. Once traders can objectively look at their trading, they will see that their trading method might be performing well but THEY are the reason for their losses.
Why changing a trading system means that you will be a failure forever
Each time, when you jump from one system to another you start from zero again and almost all previous progress is lost.
There is absolutely no chance for you to ever improve as a trader if you approach it from this angle. You are neither working on yourself nor are you learning about the so important details and tweaks to a strategy which in the end can make it profitable.
Becoming a profitable trader means overcoming the obstacles and pushing through the walls to make it to the next stage. You cannot just avoid the confrontation and the hard work and then hope to still arrive at your destination.
Nothing worth having comes easy.
You win two times, then lose three times, and move on to the next system. Have you ever seen a successful entrepreneur change his business model every week?
Persistence is key to anything we do in life. The only persistence most people have in trading is that they try a new system every few trades. If you want to keep trading like this I suggest you go to the casino and start shooting some dice; it’s way more fun at least.
How a trading journal helps you win with any trading strategy
If you are in it for the long haul though and you really want to create a long-term profitable trading business for yourself, you better start treating your trading with the seriousness it requires.
A professional trading journal can help you in many ways to take the first steps towards sustainability:
- The decision to invest into a tool that is not a flashy indicator or robot, but actually something that brings you closer to success if you put in the work, shows that you finally started taking responsibility towards yourself and your trading.
- “I know I should be keeping a journal but it’s so much work” is what losing traders say. Man up, do what you know is right and you will move closer towards your goals.
- If you put in the work, analyze and fine-tune your strategy in order to gain an edge in the markets, your trading journal will become the most valuable tool to you in your trading. It will be your treasure chest. It will become more and more valuable over time. If you hop to a new system, your treasure chest will become useless though. All the work you ever put in, gone. A trading journal will increase the connectedness to your system immensely, thus reducing the urge for system hopping drastically.
- A professional trading journal will back you up with the confidence of numbers. You know that you have probabilities and statistics on your side, even during rough times because you have it black on white. You know where your edge is because your trading journal tells you where it comes from. No trading journal, no confidence. This leads to fear and ultimately hope, the worst drug in trading.
- After starting to use a trading journal you will notice that most of the flaws and problems in trading that hold you back from making money actually come from within yourself. You are your own worst enemy. No system in the world will ever solve this. Once you recognize this, you will either be scared and give up (which is still better than hopeful system hopping), or start working hard to become better.
- A trading journal can help you adopt any strategy that fits to your personality. A common reason why traders can’t sync with a strategy is because it doesn’t fit their personality. This is unfortunate because there are many great systems out there for free. But sometimes certain metrics of the strategy, e.g. a very low RRR, just don’t match with your personality, but everything else does. You really want to trade it because the strategy fits your lifestyle, but you can’t make it work because of the psychological incompatibility. With a professional trading journal you can tweak a strategy in such a way that it fits to your personality, and still compound on the experience of the user that created the system in the first place.
Conclusion: A trading journal is often the missing piece for a trader
A professional trading journal can do a lot for you. It can change your whole trading if you use it properly.
It is one big piece in the puzzle and it provides you with a lot of the missing information when trying to make educated, profitable guesses – which trading is all about really.
So the next time you think about hopping to a new system because you took a few losers in a row – think about starting to tweak the system first. Systematically, not randomly changing indicator values. That way you will come a lot closer to discovering your edge and it empowers you to become the trader you need to be.